Dow +323.35 at 17907.87, Nasdaq +85.72 at 4736.19, S&P +36.24 at 2062.14
We see another good run as the market opened with a rally. But the remaining session was rather quiet. Basically all sectors were performing well and I reckon the bullish momentum is likely to continue...I just say tomorrow the market should continue the momentum. However do watch out if the trend is a dead cat bounce or a bullish rally.
Direction for Thursday 8 Jan, 2015; Up
Market Summary
Industry Watch
Strong: Consumer Discretionary, Health Care, Financials, Industrials, Materials, Technology, Materials, Consumer Staples
Weak:
Other Market Moving Factor:
- Futures surge on Wednesday evening after Chicago Fed President and 2015 FOMC voting member Charles Evans says raising rates would be a "catastrophe"
- S&P 500 reclaims 50-day moving average (2044)
- Crude oil remains on slippery footing
[BRIEFING.COM] The S&P 500 spiked 1.8% on Thursday, continuing its rebound that began on Wednesday when the index found support at its 100-day moving average (2005). Today, the benchmark index surged past its 50-day moving average (2044) and returned to unchanged for the year. The Nasdaq Composite had a slightly better showing, surging 1.8%.
Equity indices didn't waste any time after yesterday's rebound, extending higher in the futures market in reaction to evening comments made by Chicago Fed President, and more importantly, 2015 FOMC voting member Charles Evans. Presenting at the University of Chicago, Mr. Evans reiterated his belief that due to low inflation, the Fed should not rush to raise rates, adding for good measure that such move would be a "catastrophe."
Interestingly, Fed insider Jon Hilsenrath of the Wall Street Journal wrote this morning that the Fed could indeed raise rates soon if it is believed that low yields at the long end of the curve reflect an influx of capital into dollar-denominated assets, which could spark a surge in prices. Mr. Hilsenrath added that this was the view espoused by NY Fed President and this year's voting member William Dudley, who argued a similar situation presented itself in 2000s, leading to the housing bubble.
The signs of an impending tug-of-war at the Fed over when to pull away the punchbowl did not stop the stock market from spiking out of the gate and adding to its advance in afternoon action. Meanwhile, Treasuries retreated, sending the 10-yr yield higher by six basis points to 2.01%.
All ten sectors finished the day in positive territory with cyclical groups pacing the rally. The materials sector (+2.4%) ended atop the leaderboard, but more notably, the technology sector, which is roughly six times the size of materials, jumped 2.2%.
The largest sector by weight enjoyed broad-based support. Apple (AAPL 111.89, +4.14) spiked 3.8%, buoyed by reports of strong sales in China. Other influential sector members also posted impressive gains with Facebook (FB 78.18, +2.02), Hewlett-Packard (HPQ 40.68, +0.95), and Microsoft (MSFT 47.59, +1.36) soaring between 2.4% and 2.9%. Even Google (GOOGL 506.91, +1.76) was able to end in the green after being down as much as 1.5% after Stifel downgraded the stock to ‘Hold.' However, the relative strength was not isolated to large names. Chipmakers rallied across the board with the PHLX Semiconductor Index advancing 2.9%.
The combination of unwavering strength among technology stocks of all sorts helped the Nasdaq Composite finish just ahead of the S&P 500 (+1.84% vs +1.79%) even though biotechnology struggled to stay in the green. The iShares Nasdaq Biotechnology ETF (IBB 314.44, +2.44) gave up most of its opening gain during the first hour and flirted with its flat line, but still ended higher by 0.8%. For its part, the health care sector (+1.7%) settled in-line with the S&P 500.
Like health care, the remaining countercyclical sectors finished in-line with or just behind the broader market. Consumer staples (+1.5%) and telecom services (+1.7%) spent the day just behind the S&P 500 while utilities (+0.7%) underperformed amid the increase in Treasury yields.
Elsewhere, the energy sector (+2.2%) was able to finish among the leaders even though crude oil remained on slippery footing. The energy component crept above the $49.50/bbl level overnight, but was beaten back to its flat line. The commodity was down in excess of 1.0% intraday, but fought back to a slim gain of 0.2% at $48.80/bbl.
Today's participation was in-line with average with 830 million shares changing hands at the NYSE floor.
Economic data was limited to Initial Claims and Consumer Credit:
- Initial claims decreased to 294,000 from an unrevised 298,000 while the Briefing.com consensus expected a decline to 290,000
- Anecdotal reports of increased layoff activities in the energy sector due to low oil prices have not led to changes in unemployment insurance trends so far. That being said, we could see an uptick in claims in the coming weeks if fracking becomes unprofitable and energy companies continue slashing capital expenditure budgets.
- The continuing claims level increased to 2.452 million from a downwardly revised 2.351 million (from 2.353 million) while the consensus expected an increase to 2.365 million
- Consumer credit increased by $14.10 billion in November, down from an upwardly revised $16.00 billion (from $13.20 billion) in October. The Briefing.com consensus expected an increase of $15.0 billion
- For the last 12 months, consumer credit has increased by at least $10.00 billion per month
Macroeconomic Data
Economic Data
from Briefing.com
- Challenge Job Cuts : 6.6% (Prior -20.7%)
- Initial Claims : 294K vs 290K (Prior 298K)
- Continuing Claims : 2452K vs 2365K (Prior 2351K)
- Natural Gas Inventories : -131bcf (Prior -26bcf)
- Consumer Credit : $14.1B vs $15.0B (Prior $16.0B)
UNEMPLOYMENT CLAIMS
Highlights
- The initial claims level decreased to 294,000 for the week ending January 3 from an unrevised 298,000 for the week ending December 27. The Briefing.com Consensus expected the initial claims level to fall to 290,000.
- The continuing claims level increased to 2.452 mln for the week ending December 27 from a downwardly revised 2.351 mln (from 2.353 mln) for the week ending December 20. The consensus expected the continuing claims level to increase to 2.365 mln.
Key Factors
- The DOL reported that there were no special factors impacting the claims data.
- There have been anecdotal reports of increased layoff activities in the energy sector due to low oil prices. So far, there have been no changes in unemployment insurance trends, but we could see a slight uptick in claims in the coming weeks if fracking becomes unprofitable and energy companies continue to slash capital expenditure budgets.
Big Picture
- The overall unemployment claims data are showing an economy at, or near, full employment.
CONSUMER CREDIT
Highlights
- Consumer credit increased by $14.1 bln in November, down from an upwardly revised $16.0 bln (from $13.2 bln) increase in October. The Briefing.com Consensus expected consumer credit to increase by $15.0 bln.
Key Factors
- For the last 12 months, consumer credit has increased by at least $10.0 bln per month.
- Typically, consumer credit goes through substantial revisions before the final numbers are released. Any future revision is unlikely to alter the current growth trend.
- Revolving credit declined by $0.9 bln in November, from $883.1 bln in October to $882.1 bln.
- Nonrevolving credit increased to $2415.8 bln in November from $2400.8 bln in October, a gain of $15.0 bln.
Big Picture
- Consumer credit has increased by an average of $18.2 bln per month in 2014.
Market Internals
NYSE:
Higher Volumes than the day before – 848.0M vs 777.6M
Advancers outpaced Decliners (adv/dec): 2415 / 714
New Highs outpaced New Lows (highs/lows): 225 / 27
NASDAQ:
Higher Volumes than the day before – 2064.7M vs 1947.9M
Advancers outpaced Decliners (adv/dec): 2058 / 717
New Highs outpaced New Lows (highs/lows): 93 / 40
VOLATILITY S&P500 (VIX)
17.01 -2.30 (-11.91%)
Internals are certainly in bullish mode. With VIX gap down and closed around 17.00, it does show some confidence in the market.
Technical Updates
17,907.87 +323.35 (+1.84%)
Volume: 114,888,423 (above average of 91,295,561)
Range: 17,591.97 - 17,916.04
4,736.19 +85.72 (+1.84%)
Volume: 548,098,980 (above average of 472,793,604)
Range: 4,688.02 - 4,741.38
S&P 500 INDEX (SPX: CBOE)
2,062.14 +36.24 (+1.79%)
Volume: 604,827,000 (above average of 532,960,508)
Range: 2,030.61 - 2,064.08
It seems like a convincing bullish movement with volume supported. Despite that, NASDAQ does not perform as strongly compare to DOW and S&P. That calls for a concern here. Furthermore the indices are approaching a support/resistance level and this would test whether the market is likely to move higher...
Commodities
Closing Commodities: Oil Recovers Late-Day Losses
- Energy futures rose just modestly today, while precious metals and grains were mostly lower
- WTI crude oil began to sell-off sharply in afternoon trading, but recovered just as fast
- Feb crude fell as low as $47.73, but recovered those losses in the last 29 minutes of trading to end with a small gain
- Feb crude finished $0.11 higher at $48.81/barrel.
- Feb nat gas gained $0.05 to $2.93/MMBtu
- Feb gold lost $2.20 to $1208.50/oz, while Mar silver fell $0.17 to $16.37/oz
Energy Price Action
- Feb crude oil rose $0.11/barrel to $48.81/barrel
- Natural gas rose 5 cents to $2.93/MMBtu
- RBOB Gasoline closed unchanged at $1.34/gallon
- Heating oil rose 1 cent to $1.71/gallon
Agricultural Price Action
- Mar corn closed $0.01 lower at $3.95/bushel
- Mar wheat fell $0.12 cents to $5.67/bushel
- Feb soybeans ended $0.09 lower at $10.44/bushel
- Ethanol closed unchanged at $1.47/gallon
- Sugar #11 rose 0.10 cents to 14.88 cents/gallon
Metals Price Action
- Feb gold ended today’s session $2.20 lower at $1208.50/oz
- Mar silver ended $0.17 lower at $16.37/oz
- Mar copper closed $0.01 higher to $2.77/lb
Currencies
Dollar Hits Best Levels Since November 2003:
- The Dollar Index is off its highs, but flirts with its best levels since November 2003.
- EURUSD is -45 pips @ 1.1795 as trade presses to a nine-year low and has returned to the first level of the European Central Bank's fix. The single currency looks likely to book its fifth straight loss and 12th decline in the past 16 sessions. Data out early pointed to more weakness in the region as PPI and German factory orders became the latest numbers to miss estimates, putting more pressure on the ECB to launch a QE bazooka at its January 22 meeting. Eurozone data scheduled tomorrow is limited to French industrial production.
- GBPUSD is -5 pips @ 1.5105 after the Bank of England kept policy on hold, as expected. Early selling developed despite the strong Halifax Home Price Index, pushing sterling to a fresh 18-month low. Britain's manufacturing production and trade balance will be released tomorrow.
- USDCHF is +45 pips @ 1.0185 as action presses to its best level in more than four years. Today's foray to multi-year highs is largely as result of the weakness in the euro.
- USDJPY is +40 pips @ 119.65 as light buying persists for a second day. The recent highs near 120.75 remain in focus.
- AUDUSD is +40 pips @ .8115 as trade ticks off 55-month lows. The hard currency has been supported by the strong building approvals number. Australia's retail sales are due out tonight. China's CPI and PPI will cross the wires this evening.
- USDCAD is +20 pips @ 1.1835 as action contends with its best close in six years. The pair has been propelled by the disappointing New Home Price Index (0.1% actual v. 0.2% expected). Canadian data is heavy tomorrow as building permits, employment change and the unemployment rate are set for release.
Bonds
Treasuries Book First Loss in 10 Days:
- Treasuries ended their nine-day rally.
- Fed whisperer Jon Hilsenrath of the Wall Street Journal warned low yields at the long end of the curve may cause policymakers to hike rates sooner than previously anticipated. This pushed back against overnight comments from Chicago Fed President Charlie Evans, which fingered low inflation as the reason the Fed shouldn't rush to raise rates.
- Today's economic data had little impact as both initial (294K actual v. 290K expected) and continuing (2452K actual v. 2365K expected) claims missed estimates.
- Up front, the 2Y outperformed, sliding -1.7bps to 61.3bps. The yield continues to test support in the area that has held up since the beginning of December.
- In the belly, the 5Y added +2.3bps to 1.496%. Action probed resistance in the 1.500% area on several occasions, but was unable to put in a close above the level.
- The 10Y jumped +6.2bps to 2.016%. The benchmark yield is now looking at reclaiming resistance near 2.050%.
- Selling had the biggest impact on the long end as the 30Y rallied +7.8bps to 2.593%. The yield on the long bond has little resistance to deal with until 2.700%.
- A steeper curve won out as the 2-10-yr spread widened to 140.5bps.
- Precious metals lost ground as gold fell -$3 to $1208 and silver lost -$0.19 to $16.35.
- Data: Nonfarm payrolls, nonfarm private payrolls, unemployment rate, hourly earnings, average workweek (8:30) and wholesale inventories (10).
- Fed Speak: Richmond's Lacker gives his economic outlook (13:20).
- 2 Year Note 0.62% UNCH
- 5 Year Note 1.50% +0.03
- 10 Year Note 2.03% +0.07
- 30 Year Bond 2.59% +0.07
2/30 Spread: 197 bps ( +7 ) … 2/10 Spread: 141 bps ( +7 )
Preview for Friday 9 Jan, 2015
Earnings Highlights
Wednesday :
BMO - AYI, AZZ, INFY, SYRG
AMC - None Scheduled
Summary
The first five day indicator shows a slight gain. Does this means the year is going to be bullish? Well I leave that to the future. Anyway it is a self-fulfilling 'prophecy'.
Market seems to consolidate prior to the Non-Farm Payroll as well as the unemployment data. They are major market moving factor and we will see some movement tomorrow. Is it going up? or down?
Market seems to consolidate prior to the Non-Farm Payroll as well as the unemployment data. They are major market moving factor and we will see some movement tomorrow. Is it going up? or down?
Direction for Friday 9 Jan, 2015; Abstain
2015 Daily Directional Accuracy: 2/5 (40.00%)
2015 Weekly Directional Accuracy: 0/0 (0.00%)
2015 Weekly Directional Accuracy: 0/0 (0.00%)
No comments:
Post a Comment